Policy and nonpolicy determinants of progressivity of block residential water rates – a case study of Mauritius

Abstract

This article presents empirical results on increasing block water rates that contradict conventional wisdom in developing countries and many developed countries. Unlike in other countries, family size in Mauritius increases with income. Due to this unusual demographic dimension, increasing block tariffs coupled with lifeline rates that are below long-run marginal cost applicable to low-volume users produce a different result. Regional variations in water demand and extensive metering both in rural and urban areas reinforce the redistributing nature of water charges. Traditional incidence analysis with adjustment for family size, linear expenditure systems approach and interactive demand models empirically support this result.